Review of Accounting Studies

, Volume 20, Issue 1, pp 1–41

Does the director election system matter? Evidence from majority voting


DOI: 10.1007/s11142-014-9284-9

Cite this article as:
Ertimur, Y., Ferri, F. & Oesch, D. Rev Account Stud (2015) 20: 1. doi:10.1007/s11142-014-9284-9


We examine the effect of a change in the director election system—the switch from a plurality voting standard to a more stringent standard known as majority voting (MV). Using a regression discontinuity design, we document abnormal returns of 1.43–1.60 % around annual meeting dates where shareholder proposals to adopt MV are voted upon, suggesting that shareholders perceive the adoption of MV as value-enhancing. We document an increase in boards’ responsiveness to shareholders at MV firms. In particular, relative to a propensity score-matched control sample, firms adopting MV exhibit an increase in the rate of implementation of shareholder proposals supported by a majority vote and in the responsiveness to votes withheld from directors up for election. We do not find a relation between votes withheld and subsequent director turnover, regardless of the election standard. Overall, it appears that, rather than a channel to remove specific directors, director elections are viewed by shareholders as a means to obtain specific governance changes and that, in this respect, their ability to obtain such changes is stronger under a MV standard.


Director electionsMajority votingShareholder activismDirector turnover

JEL Classification


Copyright information

© Springer Science+Business Media New York 2014

Authors and Affiliations

  1. 1.Leeds School of BusinessUniversity of Colorado at BoulderBoulderUSA
  2. 2.Columbia Business SchoolColumbia UniversityNew YorkUSA
  3. 3.Swiss Institute of Banking and FinanceUniversity of St. GallenSt. GallenSwitzerland